Do Lotteries Really Benefit Public Schools? The Answer is Hazy

With mega millions lotteries making national headlines, we analyze how much benefit these events really provide to public school systems.

With the Mega Millions craze sweeping the country in recent weeks, how have public schools benefited? According to lottery advertising, one of the benefits of this form of gambling is generating funding for public schools. While it sounds good on paper, how much benefit do lotteries really offer to public school systems? It turns out the answer to that question may be much more complex than it appears on the surface.

An Overview of Lotteries

According to the website for the Georgia Lottery system, lottery is a “game of chance in which players have an equal opportunity to win prizes.” The first American lottery was held in Jamestown in 1612, and it made up half the entire budget the early settlers needed to build their colony. Lotteries were used by President George Washington to support the Revolutionary War, and Thomas Jefferson used them to fund a variety of public projects.

Lotteries have traditionally been used to support public works projects like building and street construction, as well as education and environmental projects. Today’s lotteries utilize the latest technology to allow players the choice between instant tickets and online games, as well as the standard lottery drawing games. Prizes for lotteries have also become more extravagant, as evidenced with the recent Mega Millions game that has made headlines in states like Virginia, California and North Carolina.

Where does Lottery Money Go?

The proceeds from lotteries can go to a variety of venues, as determined by the state. Many states boast that lottery revenues go directly to public education budgets, benefitting the children who live there first and foremost. For the most part, those claims are correct, although they can be somewhat misleading. Still, no one can argue millions – and even billions – of additional dollars have gone into state education budgets as a result of lottery participation.

Virginia Schools Cleaning Up

According to a report at the Washington Post, Virginia generated nearly $22 million in revenue just from the Mega Millions game alone. All of those proceeds reportedly go directly into the state’s education budget. Virginia retailers also made out on lottery purchases, earning more than $2.4 million in selling commissions.

The Washington Post report states that the Virginia Lottery generates as much as $1.2 million per day for the state’s public school system. During 2011, the lottery brought in more than $444 million for public schools – which makes up about eight percent of public funding for the school system overall. On the surface at least, it looks like Virginia schools are the really big winner in the state’s lottery gaming.

North Carolina Beats Recession with Lottery RevenueNorth Carolina has also seen large revenues from the lottery going directly into the public school system. According to a report at the Fay Observer, Cumberland County alone has seen more than $79.4 million in revenue from the state lottery since it began six years ago. The North Carolina Education Lottery boasts they have pumped $2.2 billion into education, which helped soften the blow of the latest economic recession.

“They’d be in worse shape than they are,” Rep. Bill Owens (D-Elizabeth City) told the Fay Observer. “We’d have a bigger hole than we do have.”

The website for the North Carolina Education Lottery shows the breakdown of how the money has been spent, covering everything from teacher salaries and pre-K programs to financial aid and scholarship funding. The state legislature has the authority to adjust allocation percentages each year as needed.

Mega Millions Provides Windfall for California Schools

California was another state that hit it big in lottery revenue, particularly with the recent Mega Millions game. ABC Local reports that for every dollar spent on Mega Millions lottery tickets, schools receive 32 cents. The total amount of revenue could exceed $100 million, according to some estimates, which could save up to 1,000 teaching jobs that are currently on the chopping block.

“With this current Mega Millions run, we’re going to be pretty close to our all-time high as far as what we’ve given schools in any given year,” Alex Traverso, a California Lottery representative, told ABC.

Show Them the Money

With states like these boasting huge windfalls in lottery revenues, it seems hard to believe that some of these states are the same ones that are in the midst of major cuts to their education budgets. If the lotteries are thriving, why aren’t the schools improving as well?

According to the Washington Post, one of the biggest problems is that the more the lotteries bring in to schools, the more states cut education budgets in anticipation of those windfalls. The Washington Post op-ed states, “Instead of using the money as additional funding, legislatures have used the lottery money to pay for the education budget and spent the money that would have been used had there been no lottery cash on other things.”

In Virginia, money gained from the lottery is now being used by state lawmakers for regular education expenses, rather than additional education funding.

“That’s been a slow and insidious movement that’s been going on for a few years now,” Kitty Boitnott, president of the Virginia Education Association, told the Washington Post. “It’s a big ruse, and I don’t believe Virginians, in general, are aware of it.”

North Carolina school officials agree that lottery money is now a staple of the education budget, rather than icing on the cake. Ricky Lopes, assistant superintendent of Cumberland County Schools, told the Fay Observer lottery funding doesn’t change the expense ratio to improve current conditions, but simply maintain a status quo.

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